topic Re: How do I correctly calculate nondeductible basis in a traditional IRA account? in Retirement tax questions

How do I correctly calculate nondeductible basis in a traditional IRA account?

lteget — Wed, 01 Oct 2025 23:24:31 GMT

My husband had a traditional IRA with all pre-tax contributions. Learning of the backdoor Roth conversion, we contributed $8000 in 2025 as a nondeductible contribution and then converted that nondeductible amount to a Roth IRA. At the time, we were unaware of the pro-rata rule but learned of it just recently.

In order to be tax efficient, we want to roll the traditional IRA over to his employer sponsored 401(k) but I have read that we cannot roll over any basis that is in the traditional IRA. I have two questions about this:

1 - Since we have not had basis BEFORE this year, can we roll the entire amount of the traditional IRA (but not the amount in the Roth IRA) into the 401(k)?

2 - If the answer to 1 is no, then how do we calculate the basis left in the traditional IRA? For example, if the traditional IRA had 70K in it before the $8000 contribution, do we say 8k/78k = ~10.3% in basis so if we plan to roll over the pre-tax amount in the IRA we would roll over $62,790 which is 89.7% of the 70k? Or am I way off?

Re: How do I correctly calculate nondeductible basis in a traditional IRA account?

fanfare — Sat, 04 Oct 2025 00:41:57 GMT

the non-deductible basis is the basis on the last Form 8606 you filed,

If you only once elected a non-deductible contribution of N dollars, your basis was N.

After a conversion, your new basis is calculated on the next Form 8606 for that year.

@lteget

Re: How do I correctly calculate nondeductible basis in a traditional IRA account?

fanfare — Sat, 04 Oct 2025 00:51:24 GMT

Once you have basis, I don't think you can roll IRA back into an employer plan.

Generally, you have more flexibility in a self-directed IRA than in an employer plan.

Re: How do I correctly calculate nondeductible basis in a traditional IRA account?

lteget — Sat, 04 Oct 2025 16:40:51 GMT

You're right in that I can't roll over any basis, but I have read in more than one place that you can leave the basis amount in the account and roll the rest in.

Luckily, after looking over the account activity again, I discovered that the amount that was converted to Roth DID include the nominal distribution so the entire amount left in the account should actually be all pre-tax. Whew. That makes things easier.

Re: How do I correctly calculate nondeductible basis in a traditional IRA account?

fanfare — Sat, 04 Oct 2025 17:24:50 GMT

That's not possible, since Form 8606 will prorate the basis aginst the IRA total value to calculate the taxable portion of the conversion.

@lteget